Mixed Reactions to Obama’s Energy Speech Tuesday

obama-energy-speechPresident Obama’s energy efficiency speech on Tuesday from Georgetown University had its fair share of twists and turns, including the introduction of emissions standards for power plants through the Environmental Protection Agency (EPA) and an unexpected (albeit ambiguous) mention of the Keystone XL pipeline.  The speech arguably presented the most extensive groundwork on carbon emission restrictions in the nation’s history, much to the dismay of many fossil fuel proponents.

All Those Opposed, Say Nay

On one end of the issue, there are the staunch supporters of fossil fuels and big business – most notably coal energy advocates – who believe the President is stifling the economy and restricting prosperity for American energy generation.  The phrase ‘war on coal’ is particularly popular this week, as many notable figures expressed their discontent for Obama’s plan to set greenhouse gas standards from power plants.

  • Shortly after Obama’s speech, House Representative Roger Williams tweeted, “Obama admin’s #waroncoal will mean fewer jobs, higher energy prices & does nothing to make energy more affordable.”
  • Speaker of the House John Boehner sent a tweet out Wednesday afternoon citing a report in Forbes, headlined “Obama Declares War on Coal, Embraces Pipeline.”
  • Robert M. ‘Mike’ Duncan, President and CEO of the American Coalition for Clean Coal Electricity, responded to Obama’s speech with “This is going to be a legacy issue for the President, a legacy of higher energy costs, lost jobs, and a shattered economy.”

Claims of higher energy prices from this plan are baseless would not be accurate.  Based on the basic principles of energy pricing, signs indicate that citizens should anticipate price increases long term.

In its simplest terms, Obama’s energy efficiency plan will give utilities two short-term choices:  one, they can spend significant amounts of money to meet the standards imposed by the EPA, or two, the plants could be pulled off of the electric grid and mothballed.  If utilities choose the latter, the electric grid will have less generating capacity and, as a result, higher energy prices from a supply deficit.  If utilities decide to follow through with plant upgrades, there’s a high likelihood that they will increase rates for customers to compensate for those costs.  Either way the situation isn’t advantageous for a customers’ bottom line, but it’s crucial to note that the President did not go into great detail about how rigorous the new regulations will be.

Another solution for utilities is building brand new natural gas-powered facilities to meet emission standards, but they can take years and would be more costly than retrofitting existing coal plants to natural gas.  New York State has already been dealing with these decisions at its Dunkirk power plant – a final decision has not been made for the coal-powered facility.

All Those in Favor, Say Aye

While increasing energy costs appear to be a foregone conclusion, the proposed changes in Obama’s energy efficiency speech Tuesday brought praise from most environmentalists and climate change advocates.  Obama presented the notion that he would accomplish everything in his power to preserve the planet for future generations, including 3 additional gigawatts of renewable energy through the Department of Defense.  “I refuse to condemn your generation and future generations to a planet that’s beyond fixing,” Obama stated, later adding, “The actions that I’ve announced today should send a strong message to the world that America intends to take bold action to reduce carbon pollution.  We will continue to lead by the power of our example because that’s what the United States of America has always done.”

Based on the tone of Obama’s speech, establishing the United States as a global leader in climate change solutions supersedes the ill-effects associated with dirtier methods of fossil fuel energy generation.  At the same time, he was very careful to not upset natural gas advocates.  Obama noted, “[Natural gas] is a transition fuel that can power our economy with less carbon pollution even as our businesses work to develop, and then deploy more of the technology required for the even cleaner energy economy of the future.”

In terms of jobs, Obama must believe in the notion that any job losses suffered within the coal industry could be regenerated by the jobs created through the natural gas boom.  After seeing an employment boost in states with elevated levels of natural gas extraction recently, who could blame him?  Obama added, “[The US] should strengthen our position as the top natural gas producer because, in the medium-term at least, it not only can provide safe, cheap power, but it can also help reduce our carbon emissions…natural gas is creating jobs.”

All Those Unsure, Say KXL

Easily the most ambiguous message from Tuesday stems from his brief mention of the Keystone XL (KXL) pipeline.  What was fascinating about Obama’s statement was that somehow both sides of the issue felt as though they heard something in their favor.  In case you missed the quote, here it is, “Our national interest will be served only if this project does not significantly exacerbate the problem of carbon pollution.  The net effects of the pipeline’s impact on our climate will be absolutely critical to determining whether this project is allowed to go forward – it’s relevant.”

On one hand, climate change activist Bill McKibben is “pleased that Barack Obama understands that the KXL fight is about climate” and Al Gore called Obama’s speech “the best address on climate by any president ever.”  Meanwhile, Transcanada – the company building KXL – also expressed a sense of victory.  Following the address, company spokesman Shawn Howard said that Transcanada is “pleased with the president’s guidance to the State department, as the almost five-year review of the project has already repeatedly found that [climate pollution] criteria are satisfied.”

So which side is the real victor?  It’s really too early to tell; it’s evident that building a new pipeline would create a climate threat that didn’t exist before, but not building a pipeline means that the oil being extracted will be sent either by rail or truck across the same areas at a slower rate.  The timing of Obama’s KXL mention matters, since public opinion may remain sullied from a rash of recent oil spills in Arkansas, Calgary, and Alaska – not to mention the 4.9 million barrels of oil spilled from the Deepwater Horizon disaster in 2010.  Until the EPA’s exhaustive study wraps up between now and the end of the decade (officially a decision is expected by the end of this summer), all we can really do is speculate.

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Kristopher Settle
Energy Curtailment Specialists, Inc.

Kris can be found on Twitter and Google+.

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